Author: sangfundu

Good News for the Chinese Economy

Great news for the Chinese economy. China has started in 2017 with its strongest quarterly performance in 18 months.  The gross domestic product grew at an annual rate of 6.9% in the first quarter of 2017, which was just slightly higher than analysts’ consensus expectations.

Wang Xinling, lead analyst at the think tank China Policy said,
“This level of growth cannot be sustained. The first quarter’s results were boosted by bank lending, and a peak in starts of long-term construction projects. After this, the indicators will start to weaken.”

Fixed-asset investment in the first quarter expanded 9.2% over the year before, which beat the forecasts that analysts had made of an 8.8% growth.

As Eswar Prasad, a China finance expert at Cornell University said,

“The apparent strength of Chinese GDP growth belies rising macroeconomic tensions and financial system stresses, exemplified by high and rising levels of corporate leverage as well as a frothy housing market.”

Read the full article and find out more details.

China Banking System Surpasses that of Eurozone

It is certainly worth noting that China’s banking system has now surpassed the eurozone’s as the world’s largest by assets. Interestingly, while China’s GDP surpassed the EU’s economic bloc in 2011, the banking system didn’t get to that spot until the end of 2016, according to analyses by the Financial Times. As explained on the Financial Times website,

“The lag reflects Beijing’s increased “financial deepening” — the term for the growth of a country’s financial system relative to gross domestic product. This has been fuelled by an extraordinary increase in bank lending since 2008, when the government unleashed aggressive monetary and fiscal stimulus to buffer the impact of the global crisis. “The massive size of China’s banking system is less a cause for celebration than a sign of an economy overly dependent on bank-financed investment, beset by inefficient resource allocation, and subject to enormous credit risks,” said Eswar Prasad, economist at Cornell University and former China head of the International Monetary Fund. Chinese bank assets hit $33tn at the end of 2016, versus $31tn for the eurozone, $16tn for the US and $7tn for Japan.”

Read the whole story and learn more.

 

eBay Comes Back to China

eBay is moving back into China, and it’s their first major move since a decade ago. This time, however, eBay seems to be sweeping the Chinese market. Chinese shoppers made $86 billion in online purchases from vendors in different countries.

Now, eBay is having a partnership with the port city of Ningbo. With the new partnership, eBay is hoping to improve their process by training local workers to help the manufacturers to meet deadlines and demands from overseas customers.

See more at PYMNTS.

Bringing Football to the Masses in China

football-636890_960_720As the Super Bowl was broadcast to millions around the world last night, there was an unusual audience that some might not have expected. That’s the Chinese crowd who were watching the American game on their mobile devices and tablets after a huge push from the social media world. Chinese citizens were able to live stream the event on Sina Weibo and other similar platforms.

Certainly, with China’s 1.4 billion people, U.S. sports leagues and companies have their eye on this population. The NFL is working hard to build enthusiasm for this game about which Chinese people know very little.

Now, about 1.5 million people in China watch live NFL matchups each week on their digital devices according to Richard Young, the managing director for NFL China. Young reports that the NFL fan base has grown 1000% over the last five years.

The Super Bowl broadcast included Chinese graphics and announcers who explained the rules and plays in Chinese. The NFL has even had “boot camps” for Chinese commentators where they have helped them to learn more about football jargon.

Time will tell if the NFL and other sports sources will be able to transfer their love of the game to the Chinese audience.

Gifts for the Chinese New Year

chinese-new-year-1605900_960_720Yes, as the Chinese New Year approaches, you can get just about anything you want in honor of this event. The Year of the Fire Rooster will start on January 28th and will include many meaningful events (and many opportunistic ones from those with something to sell!). Here are some of those opportunities:

Goldfish: Fish tanks and goldfish are considered lucky. Most Chinese shops have fish tanks at the entrance and if you give seven gold-colored fish to a friend along with one black one, you’ll be bringing them good luck.

Jewelry: There are many types of jewelry that are considered good luck for the New Year. For instance, pendants with a Chinese zodiac sign symbolize a long life.

Bamboo plants: These plants are supposed to energize the environment in your home. The number of stalks that you give to someone shouldn’t be even. And never give four of anything to a friend, since the number in Chinese sounds similar to the word for death.

Small metal bells: These are placed outside the home and bring good news and fortune to the family.

Laughing Buddha: This is a symbol of prosperity in Chinese culture. Other symbols that are thought to bring luck are the jade horses, elephants and dragons.

Three-legged frog: If you give one of these, you’ll giving someone good fortune and longevity.

Chinese lanterns: These bring fortune, especially if they have Chinese animals on them. A lanter with a rooster on it will make the perfect give this New Year.

Red envelopes: If you give money to someone you should use a red envelope. These are used to give gifts.

Chinese New Year Products Not to Miss

The possibilities are endless as the Chinese New Year approaches. Everyone wants to make money off of the major event, and they are thinking of many creative ways of doing so. Here are two examples.

You can now get your Air Force 1 Nike shoes for the New Year. They offer options to cover your shoes with metallic gold graphics in a few color choices. The Nike Air Force 1 Low Chinese New Year shoes will cost you $160.

Rather than just making money on products, some people have thought of actually making money to celebrate the Chinese New Year. That’s right. The United States Department of the Treasury is selling “Lucky Money” which is a special one-dollar note that comes with a series of numbers that start with 8888. This is considered to be a lucky number in Chinese culture.

Of course, the dollar comes in a red envelope with Chinese symbols and the envelope has a picture of a rooster on it. Of course, this is appropriate since 2017 is the year of the rooster. The director of the Treasury Department’s Bureau of Engraving and Printing, Leonard Olijar, said “It’s our most successful cultural product that we have. We expect we’ll sell out in the first week of its release.”

There will be exactly 88,888 lucky dollars so get one while they last. And don’t think they sell for $1. They sell for $5.95.

 

 

 

 

JD.com Inc. Thinks of Selling Internet Finance Unit

In interesting news, Chinese e-commerce company JD.com Inc. has said that it’s exploring the idea of a spinoff of its internet finance unit. It hopes that this might facilitate the expansion of its home market business. In a statement on Tuesday, JD.com said that it is hoping to sell its whole stake in JD Finance to Chinese investors.

Their third-quarter losses have widended by 51% to $121 million from a year ago. JD Finance was first launched in 2013 and offers financial services and products to consumers and small businesses in China.

Learn more about this here.

China: Largest Market for New Auto Sales in the World

US auto sales appear to be booming in China with the Ford Focus taking the position as the best-selling sedan in China last month and GM setting a new sales record in September.  GM has been making a concerted effort to win over wealthy Chinese consumers, and, according to Justin Hyde, the managing director of Yahoo Autos, it’s paying off.

As he said, “Right now half of GM’s sales in China come from Wuling, its joint venture brand with Chinese partners. GM wants to boost Cadillac and its other luxury models. The company is starting to build Cadillacs in China that are designed for the Chinese market.”

China is currently the largest market for new auto sales in the world. Ford is looking to double its share of the Chinese auto market to 5% from its current 2.5% by the fourth-quarter of the year. As Hyde said, “Ford is competing against a very crowded field of foreign and Chinese built competitors but Ford is getting a break. There is a new nationalistic streak that is pushing Chinese buyers to homegrown brands. The streak is hurting Japanese competitors and helping Ford.”

All eyes in the Chinese market are now on Tesla’s Model S.  While they have recently blogged that reservations are being taken for their Model S electric car, Hyde explains that things aren’t so simple. As he said, “Tesla has a lot of opportunity in China but the trick will be how it gets in there. The Chinese government controls access to its markets very tightly. It requires automakers who want to build in China to have a joint venture partner so the Chinese auto industry can learn and eventually build its own vehicles. Tesla has to consider whether it wants to partner and share its technology with a Chinese firm.”

Social Decisions in China Impacting Financial Ones

In a fascinating new article from the New York Times, they address the changing nature of marriage in China and the financial impact that it’s having. Fewer Chinese people are getting married and this is creating a dramatic shift in China’s economic and social life. With less marriages, there are less appliance needs, less other family-related purchases and less spending. Businesses have started responding to this trend, focusing on things like cheap jewelry that a single woman might buy and on smaller appliances for a single person home. They are even seeing fertility services advertising the opportunity for women to freeze their eggs.

Read the full article and see how this one social decision is starting to have vast economic ramifications.

Group of 20 Meets in China

Envoys of the Group of 20 pledged a number of initiatives. They want to boost the sluggish global growth that we are witnessing at the moment and they want to defend against the shock waves that are bound to occur with Brexit.

The Group of 20 includes the US, China, Britain, Germany and other governments. They all met in Chengdu in western China and pledged to work together to strengthen communication and cooperation. They did not, however, announce any joint action, as some financial traders were hoping that they would.

Their statement said, “We are taking action to boost confidence and promote growth. They said that they hope to achieve “strong, sustainable, balanced and inclusive growth objectives.” Learn more about the conference and get the full details about the Group of 20 and their plans.